[Federal Register Volume 64, Number 154 (Wednesday, August 11, 1999)]
[Proposed Rules]
[Pages 43856-43858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20508]
[[Page 43855]]
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Part IV
Department of Defense
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Office of the Secretary
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32 CFR Parts 230, 231, and 231a
Financial Institutions on DoD Installations; Proposed Rule
Procedures Governing Banks, Credit Unions and Other Financial
Institutions on DoD Installations; Proposed Rule
Federal Register / Vol. 64, No. 154 / Wednesday, August 11, 1999 /
Proposed Rules
[[Page 43856]]
DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Parts 230 and 231a
[0790-AG73]
Financial Institutions on DoD Installations
AGENCY: Department of Defense.
ACTION: Proposed rule.
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SUMMARY: This rule proposes to remove 32 CFR part 231a, ``Procedures
governing Banking Offices on DoD Installations'' and to revise part 230
on ``Financial Institutions on DoD Installations.'' This rule is being
promulgated to provide administrative guidelines for the operation of
banks and credit unions on domestic and overseas installations of the
Department of Defense and address areas such as the solicitation for
such services, the types of services and the logistics support
provided.
DATES: Comments must be received by October 12, 1999.
ADDRESSES: Forward comments to OUSD(C), 1745 Jefferson Davis Highway,
Suite 201, Arlington, VA 22202.
FOR FURTHER INFORMATION CONTACT: T. Summers, 703-602-0299.
SUPPLEMENTARY INFORMATION:
Executive Order 12866, Regulatory Planning and Review
It has been determined that 32 CFR part 230 is not a significant
regulatory action. The rule does not:
(1) Have an annual effect to the economy of $100 million or more or
adversely affect in a material way the economy; a section of the
economy; productivity; competition; jobs; the environment; public
health or safety; or State, local, or tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another Agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs, or the rights and obligations of
recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
this Executive Order.
Public Law 96-354, Regulatory Flexibility Act (5 U.S.C. 601)
It has been certified that this rule is not subject to the
Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if
promulgated, have a significant economic impact on a substantial number
of small entities. This rule is being promulgated to provide
administrative guidelines for the operation of banks and credit unions
on domestic and overseas installations of the Department of Defense and
address areas such as the solicitation for such services, the types of
services and the logistics support provided.
Public Law 96-511, Paperwork Reduction Act (44 U.S.C. Chapter 35)
It has been certified that this part does not impose any reporting
or recordkeeping requirements under the Paperwork Reduction Act of
1995.
List of Subjects in 32 CFR Part 230 and 231a
Armed forces, Banks, banking, Credit unions, Federal buildings and
facilities.
Accordingly, 32 CFR part 230 is proposed to be revised to read as
follows:
PART 230--FINANCIAL INSTITUTIONS ON DOD INSTALLATIONS
Sec.
230.1 Purpose.
230.2 Applicability.
230.3 Definitions.
230.4 Policy.
230.5 Responsibilities.
Authority: 10 U.S.C. 136
Sec. 230.1 Purpose.
This part:
(a) Updates policies and responsibilities for financial
institutions that serve Department of Defense (DoD) personnel on DoD
installations worldwide. Associated procedures are contained in DoD
7000.14-R\1\.
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\1\ Copies may be obtained at http://web 7.whs.osd.mil/
corres.htm
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(b) Ensures that arrangements for the provision of services by
financial institutions are consistent among the DoD Components, and
that financial institutions operating on DoD installations provide, and
are provided, support consistent with the policies stated in this part.
Sec. 230.2 Applicability.
This part applies to the Office of the Secretary of Defense, the
Military Departments, the Chairman of the Joint Chiefs of Staff, the
Combatant Commands, the Inspector General of the Department of Defense,
the Defense Agencies, the DoD Field Activities, and all other
organizational entities within the Department of Defense (hereafter
referred to as the ``DoD Components.''
Sec. 230.3 Definitions.
Terms used in this part are set forth in 32 CFR part 231.
Sec. 230.4 Policy.
(a) The following pertains to financial institutions on domestic
DoD installations:
(1) Except where they already may exist as of July 1, 1999, no more
than one banking institution and one credit union shall be permitted to
operate on a DoD installation.
(2) Upon the request of an installation commander and with the
approval of the Secretary of the Military Department concerned (or
designee), duly chartered financial institutions may be authorized to
provide financial services on DoD installations to enhance the morale
and welfare of DoD personnel and facilitate the administration of
public and quasi-public monies. Arrangement for the provision of such
services shall be in accordance with this part and related issuances.
(3) Financial institutions or branches thereof, shall be
established on DoD installations only after approval by the Secretary
of the Military Department concerned (or designee) and the appropriate
regulatory agency.
(i) Only banking institutions insured by the Federal Deposit
Insurance Corporation (FDIC) and credit unions insured by the National
Credit Union Share Insurance Fund (NCUSIF) shall operate on DoD
installations. These financial institutions may be either state or
federally chartered. Foreign banking institutions operating on overseas
DoD installations and chartered to provide financial services in that
country are excepted from this requirement.
(ii) Military banking facilities (MBFs) shall be established on DoD
installations only when a demonstrated and justified need cannot be met
through other means. Normally, MBFs shall be authorized only at
overseas locations. They may be considered for use at domestic DoD
installations only when DoD Components have been unable to obtain,
through normal means, financial services from a state or federally
chartered financial institution authorized to operate in that state. In
times of mobilization, it may become necessary to designate additional
MBFs as an emergency measure. The Director, Defense Finance and
Accounting Service (DFAS) may recommend the designation of banking
facilities to the Department of the Treasury under provisions of 12
U.S.C. 265.
(iii) Retail banking operations shall not be performed by any DoD
Component. Solicitations for such services shall be issued, or
proposals
[[Page 43857]]
accepted, only in accordance with the policies identified in this part.
DoD Components shall rely on commercially available sources in
accordance with DoD Directive 4100.15\2\.
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\2\ See footnote 1 to Sec. 230.1(a).
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(iv) Retail fees and services for products (to include related
minimum balance requirements for noninterest checking, Negotiable Order
of Withdrawal (NOW) and savings accounts) offered by financial
institutions operating on domestic installations and domestic credit
unions operating on DoD installations overseas shall not exceed 110
percent of the industry-wide averages for banks in the ``Annual Report
to Congress on Retail Fees and Services of Depository Institutions,''
published by the Board of Governors of the Federal Reserve System.
(4) Installation commanders shall not seek the provision of
financial services from any entity other than the on-base banking
office or credit union. The Director, DFAS, with the concurrence of the
Under Secretary of Defense Comptroller), (USD(C)), may approve
exceptions to this policy. Such requests for exception shall be
proposed through the Secretary of the Military Department concerned (or
designee).
(5) Financial institutions authorized to locate on DoD
installations shall be provided logistic support as set forth in Volume
5 of the DoD Financial Management Regulation (DoD 7000.14-R).
(6) Military disbursing offices, nonappropriated fund
instrumentalities including MWR activities, the Military Exchange
Services and other DoD Component activities requiring financial
services shall use on-base financial institutions to the maximum extent
feasible and consistent with sound management practice.
(7) The Department encourages the delivery of retail financial
services on DoD installations via nationally networked automated teller
machines (ATMs). ATMs are considered electronic banking services and,
as such, shall be provided only by duly chartered financial
institutions.
(i) Notwithstanding the provisions contained in paragraph (a) (3)
(iv) of this section, on-base ATM service offered by financial
institutions operating on domestic installations and domestic credit
unions operating on DoD installations overseas shall be provided
without surcharge.
(ii) Proposals by the installation commander to install ATMs from
other than on-base financial institutions shall comply with the
provisions of paragraph (a) (4) of this section, and will be considered
only when ATM service is unavailable or existing service is inadequate
and the on-base financial institution(s) either declines to provide the
service, fails to improve existing service so that it is adequate or
does not formally respond to the request within 30 days of the date of
the request.
(8) Expansion of financial services (to include in-store banking)
provided by on base financial institutions must be approved by the
installation commander. Such requests for expansion of services should
be coordinated with the installation bank/credit union liaison officer
prior to the commander's consideration. Approved expansion of services
will be documented as an amendment to the existing operating agreement
between the installation commander and the on-base financial
institution. The amendment to the operating agreement and any required
lease (to include a change to an existing lease) shall be in place
prior to the initiation of new financial services or offices.
(9) The installation commander shall ensure, to the maximum extent
feasible, that all financial institutions operating on his or her
installation are given the opportunity to participate in pilot programs
to demonstrate new financial-related technology (e.g., smart cards) or
establish new business lines (e.g., in-store banking) where a
determination has been made by the installation commander that the
offering of such services is warranted.
(10) Requests for termination of financial services must be
approved by the installation commander, substantiated by sufficient
evidence and forwarded to the Secretary of the Military Department
concerned (or designee). The Secretary of the Military Department (or
designee) shall coordinate such requests with the Under Secretary of
Defense (Comptroller), through the Director, DFAS, before notification
to the appropriate regulatory agency.
(b) The following pertains to financial institutions on overseas
DoD installations:
(1) The extension of services by MBFs and credit unions overseas
shall be consistent with the policies stated in this part and with the
pertinent status of forces agreement, other intergovernmental
agreement, or host-country law.
(2) The policies governing the operation of financial institutions
on domestic DoD installations identified in paragraph (a) of this
section shall apply to financial institutions operating overseas.
(3) Financial services at overseas DoD installations may be
provided by:
(i) Domestic on-base credit unions operating overseas under a
geographic franchise and, where applicable, as authorized by the
pertinent status of forces agreement, other intergovernmental
agreement, or host-country law.
(ii) MBFs operated under and authorized by the pertinent status of
forces agreement, other intergovernmental agreement, or host-country
law.
(iii) Domestic and foreign banks located on overseas DoD
installations that are:
(A) Chartered to provide financial services in that country, and
(B) A party to a formal operating agreement with the installation
commander to provide such services, and
(C) Identified, where applicable, in the status of forces
agreements, other intergovernmental agreements, or host-country law.
(4) Financial institutions authorized to locate on DoD
installations shall be provided logistical support as set forth in the
Volume 5 of the DoD Financial Management Regulation (DoD 7000.14-R).
(5) In countries served by MBFs operated under contract,
nonappropriated fund instrumentalities and on-base credit unions that
desire and are authorized to provide accommodation exchange services
shall acquire foreign currency from the MBF at the MBF accommodation
rate; and shall sell such foreign currency at a rate of exchange that
is no more favorable to the customer than that available from the MBF.
(6) Additional guidance pertaining to financial services overseas
is set forth in Volume 5 of DoD 7000.14-R.
Sec. 230.5 Responsibilities.
(a) The Under Secretary of Defense (Comptroller) (USD(C)) shall
develop and monitor policies governing establishment, operation, and
termination of financial institutions on DoD installations and take
final action on requests for exceptions to this part.
(b) The Under Secretary of Defense (Acquisition and Technology)
(USD(A&T)) shall develop and monitor policies and procedures governing
logistical support furnished to financial institutions on DoD
installations, including the use of DoD real property and equipment.
(c) The Under Secretary of Defense (Personnel and Readiness)
(USD(P&R)) shall advise the USD(C) on all aspects of on-base financial
institution services
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that affect the morale and welfare of DoD personnel.
(d) DoD Component responsibilities pertaining to this part are set
forth in Volume 5 of the DoD Financial Management Regulation (DoD
7000.14-R).
PART 231a--[Removed]
By the authority of 10 U.S.C. 301, 32 CFR part 231a is proposed
to be removed.
Dated: August 5, 1999.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 99-20508 Filed 8-10-99; 8:45 am]
BILLING CODE 5001-10-P